Trade Bill (First sitting)

Alan Brown Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 23rd January 2018 Public Bill Committees

[Nick Smith]

Q Mr Ashton-Hart, can you tell us more about the Australian Parliament and Government and how they do trade? In your view, how effective is that?

Nick Ashton-Hart: I am not really an expert in how the Australian Government do their consultations, so I cannot describe them in detail. I can describe how the trade officials who I deal with view them. From my conversations with trade officials over the past six or seven years, most of them find the oversight process challenging. The Australians are no exception to that.

For example, in the discussions on the flow of data that have taken place at the WTO and in the trade in services agreement negotiation, of which Australia is a part and which the US and Australia created, a significant portion of all the issues that delayed all the services parts—all the digital elements—of TISA were related to the flow of data and to the Australian negotiators’ view of what they could get their oversight processes to consent to in relation to it. A comprehensive change to their data protection regulation came into force about four years ago, and its structure made it impossible to evaluate how it would work in a plurilateral context because of how it applied liability when private information was given to non-nationals. That meant that they were unable to make an offer or respond to other offers for a considerable period of time—about 18 months, I think—as a result of their oversight process at home. That was in relation to just one part of the plurilateral negotiation.

That example has held true. I have seen it happen with probably half a dozen countries on various issues over time. If there is a political problem in one area, it generally gums up everything else because it is often not convenient for you to say, “I have a problem in Parliament at home, so I cannot talk to you about x and y.” Instead, you would say, “We are still consulting on that.” Meanwhile, you will ask for something impossibly difficult, knowing that the other party will then get stuck. Once your problem goes away, you can withdraw the thing that is causing things to stick over here, because this is the political economy. You do not want to be negotiating on your weaknesses. You want to negotiate on someone else’s, so you have to create them if you have a negotiating bloc.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Q You have mentioned that a lot of the existing deals are premised on the fact that you have got 28 EU countries and, therefore, are negotiating for a majority and compromise. Why would UK Ministers choose to just accept these deals and not be tempted to try and use Henry VIII powers to manipulate the deals or negotiate further? Why would they accept it is already a compromise?

Christopher Howarth: It is probably a matter of practicalities. There are a number of these around the world and starting negotiations with all of them at the same time is probably impractical. That is not to say that these agreements were not based on EU interests; UK interests are slightly different. There are things we would have prioritised to gain access for British companies and there were some defensive interests that were not relevant to the UK. Taking an example: citrus fruit or things we do not produce in this country. There were things we would have done differently.

These are probably questions to come back to at a later date. At the moment, it is about trying to make sure these agreements still exist when we leave the European Union, so it is the practicalities of getting these agreements moved over into the UK’s name and out of the EU’s name, putting the UK’s signature on them.

[Alan Brown]

Q You also mentioned quotas. How did quotas get allocated in the new deals? How does that come across without effectively leading to a renegotiation of a whole lot of deals, because so many countries have got vested interests in different quotas?

Christopher Howarth: If one of the European Union’s agreements has a quota in it, as the UK leaves, the counterparty might wish to continue to be able to export the same amount into the European Union and the UK. So it would be a three-way negotiation, which would involve splitting the quota up, with different countries taking different views as to what the fair way to do that would be.

[Alan Brown]

Q So it would still be a negotiation; there is no straight carry-over of quotas.

Christopher Howarth: Yes, it would need splitting up. You either do it with the counterparty via the WTO and you would need to discuss it with the European Union as well.

[Alan Brown]

Q This is more for Nick Ashton-Hart. You outlined that you really think Government should be doing impact assessments—assessing risks and opportunities. In terms of risks and opportunities, am I correct in thinking that the Government also need to look at how they are shaping their future domestic policy? We have heard that part of Brexit is that it is supposed to give opportunities to replace the common agricultural policy, but surely if you are looking at existing trade deals—taking them over, risks and opportunities—you need to look at a whole raft of other policies that are going to replace current EU-agreed, Europe-wide policies and procedures.

Nick Ashton-Hart: It depends very much on the nature of the deals in question and how recent they are. All the deals tend to be more focused on tariffs and the like, whereas it is somewhat simpler. Where it involves services, yes, even though these agreements are in force now, as was explained, you still have to accept that what France wanted from that deal when it was negotiated, what Germany wanted, what we wanted: these are not the same as what we and the other party want now. There are things such as protections for certain industries that we do not protect, but the other party will say, “Can we take that out?” and we might say, “Okay, but then we want this over here.”

Human nature is such that, if you are given a chance to negotiate on something and it is of serious monetary value, you are going to ask for a better deal than you got last time. If we buy cars, we do this. We don’t go and buy the car and say, “We will pay full price”—although some people might—or a house or the like. Countries do not do this. So you have to assume that normal human behaviour is not going to be thrown out of the window simply because we are in a hurry to transition our arrangements over to someone else. You have to assume that human nature will still apply and the other country is still going to behave as a rational negotiating partner, which is to seek their advantage from our need for speed.

The only way then to proceed is to say, “Okay, let’s look at these deals as they apply to us now and let’s consider: what is the other side likely to ask for? What is it in their interests to ask for and is it in our interests to agree to it, because it is expeditious, or because it is in our interests, or both?” You have to treat this as a negotiation, not as a replication.

[Barry Gardiner]

Q Would we be negligent if we did not take this opportunity to try to improve the economic benefit that we get out of these deals?

Nick Ashton-Hart: I cannot imagine that the constituencies of this country would see it any other way. This is a substantial portion of our GDP; it is a substantial portion of our export and import. How can you say to people that you passed up an opportunity to make things better, when that was part of the premise under which we are doing this whole exercise in the first place? And our other counterparties certainly will not see our need for speed as anything other than an advantage to them, because it is. We are the ones in a hurry. Japan is 1.8% of our exports or something like that.

--- Later in debate ---

[The Chair]

I have at least three people still seeking to catch my eye and we have a maximum of eight minutes. If we can have short questions and short answers, and if a panellist does not feel they have anything to add to someone else’s answer, perhaps we can skip on, just to try and get as many people’s questions in as possible.

[Alan Brown]

Q Chris, earlier on you made comments that said that if you were part of the devolved Governments, you would have concerns about their voices being heard and taken account of. Both the Scottish and Welsh Governments have expressed concerns that, at the moment, they are seeing the withholding of the legislative consent motion. When they are asked as to their representation on the Trade Remedies Authority, do you agree that would be a good starting point?

Chris Southworth: Overall—not just the Trade Remedies Authority—I would be concerned if I were in the devolved Administrations. There is specifically no opportunity for the devolved Administrations—or the regions, I have to say—to feed into decisions on trade. I would be very concerned about that, particularly in the devolved Administrations, where there are vulnerabilities on a whole range of different industries.

[Alan Brown]

Q You then made recommendations of changes that could be made to the Bill as it stands, which would start to ease these concerns.

Chris Southworth: My point is back to James. What is missing in the Bill is clear direction on what the Government are going to do to create a new, more inclusive structure to include all the stakeholders. That is the central point to all of the content of the Bill and every other Bill relating to trade, going forward. We must do things differently and it is all missing. There is not even a reference to it. There are references to things that will be very agitating, such as Henry VIII powers—the ability to overrule. That, to the outside world, will look like an aggravating factor, I would have thought, when we need to do the opposite and be more inclusive.

On the world stage, I have to say, the UK Government are exemplary on this. We are pushing out the message very publicly, as the Secretary of State was doing in Argentina just before Christmas time at the World Trade Organisation ministerial conference, around inclusive trade—the need to do trade for everyone and to make it work for everyone. It was exemplary. We were the most vocal Government around it, actually, but back home, when you look at the Bill, you think “That doesn’t make sense.” That was my reaction to it.

[Alan Brown]

Q Does anyone want to add anything about devolved Administrations?

James Ashton-Bell: I agree with that.

[Faisal Rashid]

Q Obviously, we talked quite a lot about consultation and stakeholders, and I really appreciate that. Listening directly to you guys from very powerful organisations in our country is important for all of us parliamentarians. I need to understand exactly how important it is to consult with stakeholders in forming the Trade Bill or trade deals. What could be the impact for UK businesses in future if that is not done in the right way? I would like one quick line from each of you. Another quick question for Tony: does this Bill have the support of trade unions, yes or no?

Tony Burke: As it stands, no.

Chris Southworth: Look at what you have got today. That is what you get when you do not get proper consultation and involvement in trade. That is what we are dealing with right now: huge social division, division and disparity across the regions, industries vulnerable. You get all of that. That is what we are dealing with. That is what you have if you do not make change. That is why the Bill needs to demonstrate change.

James Ashton-Bell: The reason we have been calling for a very formalised form of consultation is twofold. One, there are many examples in history—many countries have designed very elaborate free trade agreements that businesses do not use because they were not designed with business in mind. That is a waste of everyone’s time and our negotiating effort.

The second reason is that we find in many instances, as we saw when trying to ratify CETA, through Belgium, or with TTIP, if you do not have an inclusive process that is incredibly formalised and elaborate, you actually lose public support. Having the right advocates to push the deal across the line is something that is good for the economy. It needs to be grounded in fact to ensure that it is good, and also something that has consensus and that we can actually stand behind.

Tony Burke: Again, I am in danger of agreeing with a lot of folks in what they are saying at the moment. Regarding what has just been said, if you look at CETA and TTIP, there was massive opposition from across the spectrum. It is important that we get this right, and inclusivity is the key. We had no involvement in discussions with regard to the UK in those trade agreements and I think the same thing could happen again if we are not careful. We cannot just go casting around trying to pick one off the shelf. This is going to be a very complex issue, so everybody needs to be on board.

Martin McTague: We have regarded this as an enabling piece of legislation. It is a framework. I can say that the area where TTIP really came alive for small businesses was when they introduced the small business chapter, which meant the real concerns of small businesses had a basis on which they could discuss those issues and get them properly grounded.